MG 411 Chapter 7

pay satisfaction

a function of the discrepancy between employees' e perceptions of how much pay they should receive and how much pay they do receive. in these perceptions are equal, an employee is said to experience pay satisfaction

segmented labor supply

a labor supply that comes from multiple markets. some employees may come from different global locations, may receive different pay forms, and may have varied employment relationships

reservation wage

a theoretical minimum standard below which a job seeker will not accept an offer, no matter how attractive the other job attributes

efficiency wage theory

a theory that explains why firms are rational in offering higher-than-necessary wages

lead pay-level policy

a wage structure that is set to lead the market throughout the plan year. its aim is to maximize a firm's ability to attract and retain quality employees and to minimize employee dissatisfaction with pay

lag pay-level policy

a wage structure that is set to match market rates at the beginning of the plan year only. the rest of the plan year, internal rates will lag behind market rates. its objective is to offset labor costs, but it may hinder a firm's ability to attract and retain quality employees

human capital theory

an economic theory proposing that the investment one is willing to make to enter an occupation is related to the returns one expects to earn over time in the form of compensation

shared choice

an external competitiveness policy that offers employees substantial choice among their pay forms

pay forms

are the various types of payments, or pay mix, that make up total compensation

compensation differentials

differentials in pay among jobs across and within organizations, and differences among individuals in the same job in an organization

bourse

example: being allowed to haggle over the terms and conditions until an agreement is reached

quoted price

example: stores that label each item's price or ads that list a job opening's starting wage - you cannot name your own price

pay-with-competition policy

policy that tries to ensure that a firm's labor costs are approximately equal to those of its competitors. it seeks to avoid placing an employer at a disadvantage in pricing products or in maintaing a qualified work force

pay level

refers to the average of the array of rates paid by an employer' (base + bonuses + benefits + value of stock holdings) / number of employees

external competitiveness

refers to the pay relationships among organizations - the organization's pay relative to its competitors

ability to pay

the ability of a firm to meet employee wage demands while remaining profitable; a frequent issue in contract negotiations with unions. a firm's ability to pay is constrained by its ability to compete in its product market

marginal product of labor

the additional revenue generated when the firm employees one additional unit of human resources, with other factors held constant

utility theory

the analysis of utility, the dollar value created by increasing revenues and/or decreasing costs by changing one or more human resource practices. it has most typically been used to analyze the payoff to making more valid employee hiring/selection decisions

base pay

the basic cash compensation that an employer pays for the work performed. tends to reflect the value of the work itself and ignore differences in individual contributions

base wage

the basic cash compensation that an employer pays for the work performed. tends to reflect the value of the work itself and ignore differences in individual contributions

total compensation

the complete pay package for employees, including all forms of money, bonuses, benefits, services, and stock

labor demand

the employment level organizations require. an increase in wage rates will reduce the demand for labor, other factors constant. thus, the labor demand curve (the relationship between employment levels and wage rates) is downward-sloping

employer of choice

the view that a firm's external wage competitiveness is just one facet of its overall human resource policy and that competitiveness is more properly judged on overall policies. challenging work, great colleagues, or an organization;s prestige must be factored into an overall consideration of attractiveness

signaling theory

this theory holds that employers deliberately design pay levels and mix as part of a strategy that signals to both prospective and current employees the kinds of behaviors that are sought

relevant markets

those employers with which an organization competes for skills and products/services. three factors commonly sued to determine the relevant markets are the occupation or skills required, the geography (willingness to relocate and/or commute), and employers that compete in the product makret